Shipment on Consignment Basis under Import and Export


Shipment on Consignment Basis, a method used in International Trade.


Shipment on Consignment Basis under Import and ExportUnder the consignment basis, the seller ships the goods to his agent or representative. Exporter retains legal title to the goods though the physical possession is with the agent. As and when agent sells the goods, he makes the remittance to the principal who is the exporter. There is no financial security to the exporter if the agent is dishonest, not sincere or fraudulent in working as no document of evidence in the form of Bill of Exchange is available to protect him from default. In case goods are not sold, the agent will send back 1 the goods to the exporter, at the risk and cost of later. However, this form of payment arrangement is common in respect of those goods, which cannot be standardized in respect of quality such as tea, coffee, wool etc.

There is a certain advantage to the exporter to secure better realization as the buyers would be having an opportunity to inspect the goods and may be willing to pay a higher I price if they are satisfied with the quality of the product.

At the time of sending the goods on consignment; the exporter has to declare the selling Price of the goods in the GR form. If the value of the goods is not ascertainable, the exporter has to declare that value, at which they can be sold, having regard to the prevailing market conditions at that time. FERA provisions indicate that the exporter shall not sell the goods at a price lower than the declared value unless exporter takes prior permission of RBI for such sale.


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VIVEK AGNIHOTRI: WHAT IS THE DIFFERENCE BETWEEN CONSIGNMENT EXPORTS AND WAREHOUSE EXPORTS AS RBI HAS MENTIONED IN B-12 & B-13 Clause in their master circular. HOW TITLE OF OWNERSHIP OF GOODS WORK IN BOTH THE CASES. For example:1) if exporter sells the goods to his agent on CIF Basis and agent clear the goods in customs and keeps the goods in warehouse then how the title of ownership will change and how much time RBI allows payment receipt in India.Will this be consignment sale or warehouse sale?


RBI: RBI rules on Consignment exports below: (i) When goods have been exported on consignment basis, the AD Category-I bank, while forwarding shipping documents to his overseas branch/ correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export. This procedure should be followed even if, according to the practice in certain trades, a bill for part of the estimated value is drawn in advance against the exports. (ii) The agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter. (iii) The account sales received from the Agent/Consignee should be verified by the AD Category – I banks. Deductions in Account Sales should be supported by bills/receipts in original except in case of petty items like postage/cable charges, stamp duty, etc. (iv) In case the goods are exported on consignment basis, freight and marine insurance must be arranged in India. (v) AD Category – I banks may allow the exporters to abandon the books, which remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters may show the value of the unsold books as deduction from the export proceeds in the Account Sales.

sahil: what does the term books mean in the aforementioned answer, where they have used the term "unsold books"

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